How much is a human egg worth? The question is at the heart of a federal lawsuit brought by two women who provided eggs to couples struggling with infertility.

The women claim the price guidelines adopted by fertility clinics nationwide have artificially suppressed the amount they can get for their eggs, in violation of federal antitrust laws.

The industry groups behind the price guidance—which discourages payments above $10,000 per egg-donation cycle—say caps are needed to prevent coercion and exploitation in the egg-donation process.

But the plaintiffs say the guidelines amount to an illegal conspiracy to set prices in violation of antitrust laws. The conspiracy, they argue in court papers, has deprived women nationwide a free market in which to sell their eggs, and enabled fertility clinics to “reap anticompetitive profits for themselves.”

One thing I did not previously know is that, according to the article, the court will hear motions later this summer on certifying an expanded class that would include not only past donors (as is currently the case) but also potential future donors. It wasn’t clear to me from the article what sort of relief would be sought on behalf of these future donors. Perhaps injunctive relief? I’ll have to leave it to the Civ Pro experts to speculate.

In any event, my fifteen minutes of fame come at the end of the article:

Kimberly Krawiec, a law professor at Duke University who has studied the egg-donor industry, played down such concerns, adding that mothers-to-be generally aren’t looking to build a genetically superior child. Ms. Krawiec said she had little issue with couples paying more for eggs from women with, say, high SAT scores. “Fertile people have been screening for beauty and intelligence for years and years,” she said. “It’s called dating.”

The ASRM defense that the price caps are needed to prevent differential payments for particular traits is one I address in more depth in a forthcoming Journal of Applied Philosophy article. I’ll be back to say more about that in the coming days.

Recent innovations in immunosuppression, kidney matching algorithms, kidney swaps, and NEAD (nonsimultaneous, extended, altruistic donor) chains provide great hope. Yet, so far none of these mechanisms is sufficiently developed to make a serious dent in the kidney shortage. . . .

For all of these reasons, we believe the time is ripe to reconsider inducements to kidney donation, and financial inducements in particular. Granted, pure “cash for kidneys” proposals are unlikely to garner popular support at this juncture, as evidenced by public opinion polls and the federal government’s reaction to incentives for bone marrow donations. . . .But an open market in kidneys is not the only option. Instead, any incentive system should build on the existing transplant frameworks and methods that already enjoy widespread acceptance. In particular, it would make sense to continue with a system where a government agency procures kidneys from carefully vetted donors and distributes them to transplant patients according to priority established by medical need. The main change is that the government agency would be in a position to provide some financial compensation to donors. . . .

A paper stemming from the workshop and approved by the Boards of both the American Society of Transplantation and the American Society of Transplant Surgeons has now been published in the American Journal of Transplantation and is available online. From the paper:

The potential for financial incentives to increase organ donation, and ethical considerations that might accompany their implementation remains a controversial topic, fraught with confusion and misunderstanding, and with global implications. Given the growing organ shortage and the evolving discussion of these issues, leadership of both the American Society of Transplantation (AST) and American Society of Transplant Surgeons (ASTS) agreed to convene a workshop to develop a policy statement, acceptable to both societies, on the potential of creating incentives for organ donation in the United States On June 2–3, 2014, 38 representatives of the two societies (including experts in medical ethics, economics, and health care law and policy) assembled in Chicago to explore the potential of incentives to increase both living and deceased organ donation. . . .

By the end of the meeting, it was agreed that though donors assume medical risk and, in most cases, the financial costs associated with donation, everyone else involved in the organ transplant process (recipients, physicians, hospitals, and associated professionals) benefits, most often financially. Might changing this dynamic encourage more potential donors to become actual donors? . . .

We believe it important not to conflate the illegal market for organs, which we reject in the strongest possible terms, with the potential in the United States for concerted action to remove all remaining financial disincentives for donors and critically consider testing the impact and acceptability of incentives to increase organ availability in the United States. However, we do not support any trials of direct payments or valuable considerations to donors or families based on a process of market-assigned values of organs.

My sense is that this is a small, but important, step forward in the debate over incentives and disincentives to donate. The authors are leaders in the major transplantation societies, and their views carry a lot of weight.

February 23, 2015

Those of you on twitter should feel free to join me tonight as I host a Bioethx chat on Reverse Transplant Tourism. Given that I am a twitter moron, still don't understand hashtags, and find it hard to even understand much tweet shorthand, this could be fun.

A husband and wife from the Philippines, Jose and Kristine Mamaril, are the first participants to benefit from this innovative system that allowed Mr. Mamaril to receive a life-saving transplant in Toledo from an American donor in Georgia. His wife, who has a coveted blood type, reciprocated by donating a kidney to a man in Minnesota who previously would have had to wait years for a match.

. . .

“In rich countries there’s not enough kidneys for people who have kidney failure, but there is plenty of money to pay for all the transplants. In poor countries, there’s lots of people that need kidney transplants and lots of available donors, but in poor countries they don’t have enough money,” Dr. Rees said.

This new program breaks down some of those barriers and helps bring people with the universal Type O blood into the U.S donor system, while helping someone from another country get access to free medical care.

One year of a kidney patient’s dialysis costs Medicare about $90,000, or nearly triple the $33,000 cost of a kidney transplant, Dr. Rees said. He argues his donor-matching system will ultimately save the federal government and private insurers money because it moves patients with kidney failure, also known as end-stage renal disease, off dialysis sooner.

You can download our recently published article on Reverse Transplant Tourism here.

February 06, 2015

Regular readers will recall that I’ve blogged here before about Reverse Transplant Tourism (RTT), a new form of cross border kidney paired donation that Mike Rees and I propose in a recently published article. RTT leverages the substantial cost savings of transplantation over dialysis to pay for immunosuppressant drugs for a foreign recipient, in exchange for an agreement to enter into a kidney swap or NEAD (non-simultaneous, extended, altruistic donor) chain. The transaction is fairly complex, but I give a reasonably short and easy to understand summary in the posts linked below if you want a better understanding of RTT and its benefits.

Well, I am pleased to report that the first RTT took place in a series of transplants arranged by Mike Rees here in the US and Don Paloyo in the Philippines!

You can watch the video about Jose and Kristine below:

I can attest from first hand observation that this first RTT had to overcome major hurdles before getting off the ground. Dozens of folks dedicated time, money, and expertise to make it happen. But as we state in our paper, and Mike reiterates in the video, RTT cannot survive on philanthropy alone. In order to be sustainable, the insurance companies and (eventually) Medicare – who save thousands of dollars from each RTT transplant – have to fund RTT and other transplant innovations in order to really make a dent in the ever-growing waitlist.

February 04, 2015

Yesterday, as expected, the US District Court for the Northern District of California certified a class of human egg donors in Kamakahi v. ASRM on the question of whether an agreement among members of the American Society for Reproductive Medicine to cap compensation to those donors violated the Sherman Act. The Court declined to certify the class on the issue of damages, reserving the question of how to determine that issue until after adjudication on the antitrust violation.

From the Order:

The class defined as follows is certified to determine whether the Guidelines‘ restriction of “appropriate” compensation to $5,000, or $10,000 with justification, violates the Sherman Act, with the method of adjudicating damages and injury-in-fact to be determined if Plaintiffs prevail in showing a Sherman Act violation:

All women who sold human egg donor services for the purpose of supplying human eggs to be used for assisted fertility and reproductive purposes (“AR Eggs”) within the United States and its territories at any time during the time period from April 12, 2007 to the present (the “Class Period”) to or through:

any clinic that was, at the time of the donation, a member of Society for Assisted Reproductive Technology (“SART”) and thereby agreed to follow the Maximum Price Rules (as that term is defined in Plaintiffs‘ Consolidated Amended Complaint) set forth by SART and the American Society for Reproductive Medicine (“ASRM”); and/or

any AR Egg Agency that was, at the time of the donation, agreeing to follow the Maximum Price Rules.

January 22, 2015

Regular Lounge readers may recall the Taxing Eggs Mini-Symposium we held here last February, which gathered a number of tax experts to discuss Perez v. Commissioner, No. 9103-12 (Feb. 14, 2014) (Holmes, J.), the first case addressing the inclusion in taxable income (and perhaps the proper characterization) of compensation received for the sale or donation of human eggs and related services.

The decision was filed today and, as predicted by our panel of experts, held that the money received by Perez was not “damages” under I.R.C. section 104(a)(2) and must be included in gross income. Because both parties agreed that the payment was for services, however, the case doesn't address any capital gains issues.

We see no limit on the mischief that ruling in Perez’s favor might cause: A professional boxer could argue that some part of the payments he received for his latest fight is excludable because they are payments for his bruises, cuts, and nosebleeds. A hockey player could argue that a portion of his million-dollar salary is allocable to the chipped teeth he invariably suffers during his career. And the same would go for the brain injuries suffered by football players and the less-noticed bodily damage daily endured by working men and women on farms and ranches, in mines, or on fishing boats. We don’t doubt that some portion of the compensation paid all these people reflects the risk that they will feel pain and suffering, but it’s a risk of pain and suffering that they agree to before they begin their work. And that makes it taxable compensation and not excludable damages.

I note that the case includes citations to articles by three of our Taxing Eggs participants: Bridget Crawford, Lisa Milot, and me.

(Oh my, this post does contain the three cardinal sins of blogging: content links, use of the first person, and self-promotion. Oops, I just did it again).

January 20, 2015

By now, most Lounge readers are likely already familiar with SeekingArrangement, a website that connects sugar “babies” and “daddies.” For those that aren’t, SeekingArrangement claims 3.6 million active members, 2.6 million of them babies and 1 million daddies (and, supposedly, mommas, though other references on the site are exclusively to daddies).

US Colleges With The Highest Number of Babies

According to the website, sugar daddies receive no strings attached relationships with attractive women. In exchange, sugar babies receive “shopping sprees, expensive dinners, and exotic travels,” a “mentor” who can provide “valuable guidance,” and the freedom to no longer worry about unpaid bills.

But that’s all old news.

What is new news, according to the Atlantic, is the impact that the rising cost of student debt has had at SeekingArrangement. Apparently, sugar daddies are rushing to the rescue at campuses across the country, volunteering to subsidize tuition costs:

What might have been little more than a nuisance in the past has turned into an outright hindrance to many students’ financial security: It takes about 14 years on average to pay off the debt. As a result, young women across the country are turning to sugar daddies in droves. Many of them use SeekingArrangement, which describes itself as "the world’s largest Sugar Daddy dating site." More than 1.4 million students have signed up as members, including nearly 1 million in the U.S., according to the company. The website claims that 42 percent of its members are students. . .

Colleges With The Highest "Babies" Growth (2014)

Georgia State, Arizona State and Kent State are all sugar baby hot spots. But it is NYU, which charges $46,170 a student for tuition and fees, that this year became the first college ever to cross the "1000 sugar babies" threshold.

January 14, 2015

In my last two posts, I introduced a new form of cross border kidney paired donation – Reverse Transplant Tourism (or “RTT”) -- that Mike Rees and I propose in a recently published article. To recap, under RTT a biologically incompatible US pair, Amanda and Bob, engages in a kidney swap with a compatible Mexican pair, Carlos and Diana, who have no practical access to transplantation because the Mexican public health care system pays for transplantation but not immunosuppression. RTT leverages the substantial cost savings of transplantation over dialysis to pay for immunosuppressant drugs for Diana, in exchange for an agreement by Carlos and Diana to enter into a kidney swap with Amanda and Bob.

Bob has a new kidney, Diana has a new kidney, Bob’s insurance company saves money, and the Mexican government is on the hook for no more than its usual expenses. But NOTA (The National Organ Transplant Act), which prohibits “valuable consideration” for the acquisition, receipt, or transfer of any human organ lurks in the background. Why does RTT not violate NOTA? We argue that RTT passes muster under NOTA due to a combination of three unusual characteristics of the exchange: (1) Carlos’s perfect-world donative intent, (2) Carlos’s altruistic motivation, and (3) the medical necessity of the benefit received in the swap (Diana’s immunosuppression).

First, let me explain the concept of “perfect world donative intent,” which we think is very important to an analysis of the legality of RTT or any other transplant transaction. RTT differs in one important respect from other inducement schemes that arguably qualify as valuable consideration under NOTA: RTT does not provide an inducement to donate an organ. Rather, RTT provides an inducement for someone who, in a perfect world free of financial and immunological barriers, would altruistically donate an organ to a friend or family member, to instead donate that same organ to someone else. Once this is recognized, it becomes clear how and why RTT does not run afoul of standard objections to inducements to donate.

Second, Carlos’s motivation for the exchange is altruistic: He wants to benefit Diana rather than himself. These two factors distinguish RTT from other common proposals to increase the organ supply through inducements, such as financial incentives that accrue directly to the donor.

Finally, the benefit in question—Diana’s immunosuppression—is incidental to and medically necessary for the transplant to succeed. For all of these reasons and others, we believe that RTT is sufficiently similar to currently accepted practices, such as kidney-paired donation and NEAD (non-simultaneous, altruistic donor) chains, that it does not violate NOTA.

In sum, the need for transplantable kidneys far exceeds supply. In the face of NOTA’s restrictions on valuable consideration, creative solutions to the organ shortage are needed. It is even better when those solutions also reduce the costs associated with end stage renal disease.

RTT accomplishes both of those goals. Instead of non-U.S. kidney donors being offered money through a black-market middleman in exchange for one of their kidneys, we believe that RTT would provide a legal and ethical exchange of living-donor kidneys through kidney-paired donation. In this way, the donors will not receive money for their kidneys, but rather will receive a transplant for someone they love.

January 09, 2015

In my last post, I began discussing a new form of cross border kidney exchange, Reverse Transplant Tourism (or “RTT”), that Mike Rees and I propose in a recently published paper. To recap, RTT envisions a kidney swap between a biologically incompatible US pair and a foreign compatible pair who nonetheless have no practical access to transplantation for economic reasons. In the example chosen, Mexico, the state health care system pays for dialysis and transplantation, but not the immunosuppression necessary to prevent the body’s rejection of a transplanted kidney. As a result, transplantation is realistically available only to Mexican citizens with independent access to such drugs – i.e. they are wealthy enough to pay for it themselves or have access to philanthropic aid.

RTT proposes to leverage the substantial cost savings of transplantation over dialysis to pay for immunosuppressant drugs for Diana, in exchange for an agreement by Carlos and Diana to enter into a kidney swap with Amanda and Bob. Thus, as shown in the accompanying figure, Amanda transplants to Diana, Carlos transplants to Bob, and the money saved from Bob’s ongoing dialysis is used to pay for the immunosuppressant drugs that Diana otherwise could not get.

Bob has a new kidney, Diana has a new kidney, Bob’s insurance company saves money, and the Mexican government is on the hook for no more than its usual expenses. Everyone is happy. Who could possibly object to such a welfare-improving transaction?

Arguably, someone familiar with the National Organ Transplant Act (“NOTA”), though as we detail at great length in the paper, neither the statute’s text, legislative history, nor underlying policy goals suggest that NOTA was meant to apply to RTT. NOTA prohibits the knowing acquisition, receipt, or transfer of “any human organ for valuable consideration for use in human transplantation if the transfer affects interstate commerce.” NOTA does not define the term valuable consideration and, as we detail in the paperand I have discussed in previous posts, the Act’s legislative history provides almost no guidance regarding the meaning of the term beyond the obvious legislative concerns of “buying,” “selling,” and “commerce” in human organs. Indeed, a careful reading of the legislative history of NOTA (which I undertake in the paper) suggests that Congress paid little, if any, attention to the possible meanings of and ambiguities in the phrase “valuable consideration.”

That leaves an analysis of the possible public policy goals animating NOTA’s ban against valuable consideration. In our paper, Mike and I analyze those public policy goals and demonstrate that RTT does not run afoul of any of them. In fact, RTT actually minimizes some public policy concerns better than current transplant practices do.

In my next post, I’ll discuss the public policy goals that might have animated NOTA in more detail, and demonstrate why those public policies suggest that RTT does not violate NOTA.

The short version is that Reverse Transplant Tourism (“RTT”) is a new form of cross-border kidney paired donation. Such kidney exchanges, in which patients with willing but incompatible living kidney donors exchange their donors’ kidneys, have already become common in the United States. But RTT takes the standard kidney exchange a step further, by expanding it to poor patients outside of the United States who have a willing donor, but who are not able to afford a transplant.

We label the procedure “reverse transplant tourism” for a few reasons, intending a play on words. One meaning is literal – in transplant tourism, patients from rich countries typically travel to poorer ones seeking a donor willing to trade a kidney for cash payments. Under RTT, patients from poor countries travel to rich ones, in order to obtain a transplant that could not be performed in their home country, due to their poverty and the limitations of their national healthcare system. In addition, RTT could “reverse” many of the negative effects of illegal transplant tourism by avoiding its organ-deficit problem (rather than a net outflow of kidneys from the developing to developed world, RTT matches kidney inflows to outflows) and by building on the system of protections for donors and recipients already present in the U.S transplant system. In the process, RTT helps an ailing American patient whose willing donor is biologically incompatible.

To illustrate, let’s begin with the common kidney swap. Suppose that Amanda wants to donate a kidney to Bob but is unable to do so, either because their blood types do not match or because there is some other incompatibility. Another pair, Carlos and Diana, faces the same problem. However, Carlos is compatible with Bob, and Amanda is compatible with Diana. By swapping, as illustrated in figure 1, the kidney swap enables two transplants, providing both Bob and Diana with a compatible kidney. Although kidney exchange began with this type of two-pair exchange, longer exchanges and chains of transplants have recently come to dominate.

Imagine now, however, that Carlos and Diana, rather than facing biological incompatibility, face a different problem: They are poor and live in a country where poverty is a barrier to transplantation – let’s assume Mexico, which does not pay for all of the necessary costs of transplantation. As illustrated in figure 2, RTT can help both Bob and Diana, allowing each to receive a kidney that they otherwise could not—in Bob’s case because of his biological incompatibility with Amanda, and in Diana’s case because of her poverty and lack of adequate health care coverage.

Because transplantation is much less expensive than dialysis, RTT both saves money and transplants two patients who otherwise could not obtain one – in one case because of biological incompatibility and, in the other, due to lack of access to health care coverage.

In my next post, I’ll provide some more details regarding RTT, explain why it ultimately saves money, and discuss the applicability of NOTA. In the meantime, you can read the full paper here.

December 31, 2014

I spent yesterday at a really fun roundtable on the State and the Market at Bar Ilan University. The roundtable, organized by Tsilly Dagan and me (well, really just Tsilly, who did all the work) featured several paper panels and discussion on issues that will interest Lounge readers interested in Taboo Trades. Yuval Feldman presented an interesting paper (as always) about an MTurk study of subtle conflicts of interest – when “good people do bad things,” and Hila Shamir presented some early-stage research on how the state can support women in the workplace, in particular, working mothers.

I’m, of course, partial to my own panel, which featured Benny Shmueli’s paper on the alienability of the get (the Jewish divorce bill) and Ram Rivlin’s analysis of why we perceive certain transactions as taboo when the trading is among strangers, yet accept similar intra-familial transfers as uncontroversial. I discussed commodification in the oocyte market – specifically, two cases of first impression in the United States (one an antitrust suit against the American Society For Reproductive Medicine and the other a tax case regarding the proper treatment of income earned from egg “donation.”)

But the stars of the show were undoubtedly Tsilly Dagan and Talia Fisher, whose paper on the fragmentation and tradability of sovereignty makes even the proposal by my colleagues Joseph Blocher and Mitu Gulati (on the same panel) to marketize sovereign control look tame in comparison.

We are happy to invite you for a roundtable on “The State and the Market” to be held December 30th 2014 at Bar Ilan University Faculty of Law (room # 300 @ the Banin building).

Please find below a short description of the focus of our discussions as well as our schedule

Tsilly Dagan & Kimberly D. Krawiec

The State and The Market

The intersection of the state and the market is the center of attention of many theoretical perspectives and disciplines. The ways in which states design their markets and set their borders has a major effect on the nature of society, and the identities of individuals within it. At the same time markets (in goods, in services, investments as well as the market-like competition between states under globalization) alter states’ policies and capabilities and curtail their sovereign powers.

In this workshop, we wish to encourage participants to present their work in progress focusing on the description, explanation, and the normative evaluation of the mutual effects of states and markets: the cases where the two institutions limit one another and the cases where they facilitate each other’s prosperity.

‫

16:30- 17:30 When State and Market Interact

Yuval Feldman & Eliran Haleli , “Exploring the Potential Role of Law in Enhancing Neutrality in Subtle Conflicts of Interest Situations‫.”

Hila Shamir, “Designing Legal Mechanisms for the Promotion of Women: the Market, The State, The Family and the Public Good”

17:45-19:15 Taboo Trades

Kimberly D. Krawiec, “Commodification (Or Not) In The Oocyte Market”

Benny Shmueli, “Trading the Right to Divorce: On Inalienability, Commodification, and Using Liability Rules in Cases of Refusal to Divorce”

December 18, 2014

The latest issue of Law & Contemporary Problems is now out and you can access all of the articles in the volume online (see the embedded webpage below, or go here). This issue, edited by Phil Cook and me, features articles from law, medicine, economics, and more. Each paper addresses the ethics, laws, and other issues relating to inducements for organ donation. I'll be back with more to say about specific papers in the volume, but in the meantime, there are very few other sources that tackle this question so specifically or in such depth. Prior posts on the Organs & Inducements symposium are here and here.

November 24, 2014

Okay, none of you met me in Paris in October. Fine. I forgive you. But, the relevant question is, how do we move forward from here? Well, you could meet me at this awesome roundtable on “The State and the Market” that I’m hosting with Tsilly Dagan on December 30th at Bar Ilan University. If you happen to be in the neighborhood, just drop me (Krawiec@law.duke.edu) or Tsilly (Tsilly.Dagan@biu.ac.il) an email letting us know you plan to attend.

We are happy to invite you for a roundtable on “The State and the Market” to be held December 30th 2014 at Bar Ilan University Faculty of Law (room # 300 @ the Banin building).

Please find below a short description of the focus of our discussions as well as our schedule

Tsilly Dagan & Kimberly D. Krawiec

The State and The Market

The intersection of the state and the market is the center of attention of many theoretical perspectives and disciplines. The ways in which states design their markets and set their borders has a major effect on the nature of society, and the identities of individuals within it. At the same time markets (in goods, in services, investments as well as the market-like competition between states under globalization) alter states’ policies and capabilities and curtail their sovereign powers.

In this workshop, we wish to encourage participants to present their work in progress focusing on the description, explanation, and the normative evaluation of the mutual effects of states and markets: the cases where the two institutions limit one another and the cases where they facilitate each other’s prosperity.

‫

16:30- 17:30 When State and Market Interact

Yuval Feldman & Eliran Haleli , “Exploring the Potential Role of Law in Enhancing Neutrality in Subtle Conflicts of Interest Situations‫.”

Hila Shamir, “Designing Legal Mechanisms for the Promotion of Women: the Market, The State, The Family and the Public Good”

17:45-19:15 Taboo Trades

Kimberly D. Krawiec, “Commodification (Or Not) In The Oocyte Market”

Benny Shmueli, “Trading the Right to Divorce: On Inalienability, Commodification, and Using Liability Rules in Cases of Refusal to Divorce”

The book answers the question “Are there some things which you permissibly may possess, use, and give away, but which are wrong to buy and sell?” in the negative, in contrast to the numerous books already written on the topic which take the contrary position. Brennan and Jaworski are selling three tiers of acknowledgements: Silvermint Tier, Platinum Tier, and Gold Tier (The Silvermint Tier is so named because philosophy and women’s studies professor Daniel Silvermint is paying to have the highest tier named after him.)

Wish I had thought of that! But no reason I can’t adopt it going forward. In addition, I’ve decided to sell links to and mentions of your work in my blog posts and tweets. I’m still working out the exact fee schedule, but will charge extra for highly positive mentions and even more for highly negative mentions (as controversy is always an attention getter). Finally, if those pesky law review editors won’t stop bothering you for support that you can’t find, just let me know and I’ll sell you a blog post setting out the needed statements, to which you can then cite.

We often complain that student editors demand support for obviously correct statements of common knowledge – indeed, it is sometimes the case that the proposition is so widely known and accepted that it is difficult to find discussion of the point in print. For example, you may want to reference the uncontroversial view that “professors of market regulation are considered smarter and more interesting than professors of constitutional law,” yet struggle to find something in print to that effect (in contrast to the faculty lounge and hallway conversations in which this assertion is frequently found). Problem solved! Just let me know the statements for which you need a citation and I’ll post them here for a fee. The profit possibilities on this one are nearly endless.

October 31, 2014

Glenn Cohen (Harvard Law) and Eli Adashi (Brown Medical School) have published Made-to-Order Embryos for Sale -- A Brave New World?, a short "Sounding Board" article in the New England Journal of Medicine (full cite: 368 New Eng. J. Med. 2517 (2013)). In the article, the authors look at legal and ethical issues surrounding what they call the "made-to-order" embryo business. The basic premise is that a fertility clinic takes eggs from one "donor," sperm from another, and creates several embryos at once that are then distributed for implantation among several patients. Professors Cohen and Adashi refer to this LA Times article describing this practice at one clinic.

It is worth adding to the conversation about the embryo business a discussion of taxation. Talking about tax helps bring into focus the economic aspects of transactions that in many other contexts are obscured by the language of altruism. Are there any special considerations to take into account in calculating the clinic's basis in a made-to-order embryo? How are for-profit clinics reporting their income in jurisdictions where such embryo sales are legal? My quick take is that the made-to-order embryos would be inventory in the hands of the clinic and the sales would not be eligible for capital gains treatment.

Many tax scholars eagerly await the Tax Court's decision in the Perez case (see, e.g., the Lounge's earlier mini-symposium here and here). Regardless of how that court rules, it seems to me that the intersection of taxation and the reproductive technology is going to get more -- not less -- complicated. This is an area to watch.

October 20, 2014

Yesterday marks the thirtieth anniversary since passage of the National Organ Transplant Act (NOTA) and, as noted by Eric Posner over at Slate, no one is celebrating. Instead, the growing gap between kidney need and supply, documented by Phil Cook and mehere and depicted in the figure above right, has prompted increasing calls for changes to NOTA’s ban against valuable consideration in exchange for a human organ. Once the province of a small number of “kooky” academics, today even many transplant professionals join the call for reform. Recently, for example, the President of the American Society for Transplantation called on the association to consider “incentives, including but not limited to financial ones,” for organ donation and a widely-circulated letter from bioethicists and health experts to President Obama and other top government officials calls for pilot studies of benefits to organ donors.

On this anniversary of the statute, it’s worth revisiting NOTA’s legislative history (which I discuss in more detail here). Although NOTA is today most often discussed in connection with its prohibition of “valuable consideration,” it is important to remember that such a ban was not the central purpose of the statute, and was added to the statute relatively late. Original drafts of NOTA addressed only the development of a national organ procurement and distribution system. The prohibition on compensated organ donation was added later, in response to a Washington Postarticle about the plans of H. Barry Jacobs, a Virginia physician whose medical license had previously been revoked for Medicare fraud, to establish a for-profit organ brokerage.

Perhaps because the “valuable consideration” language was a late addition to the statute in response to a specific concern, NOTA’s legislative history addresses the term “valuable consideration” only with respect to that concern, and does not provide much insight into the term’s breadth beyond the commercial exchange context. Indeed, a careful reading of the legislative history of NOTA suggests that Congress paid little, if any, attention to the possible meanings of and ambiguities in the phrase “valuable consideration.”

This apparent lack of Congressional attention to statutory language that, while of little import at the time, has assumed great significance in the face of the persistent kidney shortage, matters a great deal. Concerns about running afoul of NOTA regularly impede innovations designed to address the kidney shortage, despite the lack of a clear congressional intent to prohibit these transactions. For example fears of violating NOTA put a halt to Pennsylvania’s planned pilot program to reimburse funeral expenses and have caused uncertainty about the validity of specific practices, such as kidney swaps, that bear little resemblance to the commercial transactions Congress appeared to have in mind when passing the statute.

In short, a vast academic literature addresses “valuable consideration” under NOTA. Commentators debate the meaning of the term and what Congress must have intended with this ambiguous language. But my analysis suggests that Congress, in passing NOTA, only considered the term “valuable consideration” in the context of a very specific and immediately salient threat involving for-profit, commercial exchanges.

Congress could give us all a nice NOTA birthday gift by amending the statute to specifically permit the types of innovations currently being proposed from a number of NOTA critics, none of which involve the type of profit-seeking kidney brokers that originally prompted the “valuable consideration” ban. Barring that, as I previously discuss in this earlier series of posts, uncertainty regarding NOTA’s scope is likely to continue to impede innovation, exacerbate the kidney shortage, and produce unnecessarily high rates of death and disability from kidney failure.

In “celebration” of the anniversary, I plan to be back this week with a few more NOTA-related posts.

July 31, 2014

The N.Y Times had a (somewhat) interesting front-page article on commercial surrogacy a few days ago. I add the qualifier “somewhat” because the article is factually interesting, detailing the scandal associated with Rudy Rupak’s Planet Hospital, a California-based medical tourism company. But the article, while implying that regulation is needed to stop these sorts of abuses in the future, doesn’t explore what I think is the far more interesting question of the trade-offs that are often politically necessary when it comes to regulating reproduction, including commercial surrogacy.

The article describes Mr. Rupak’s dealings as an international surrogacy intermediary, connecting prospective parents with surrogates and clinics in surrogacy hotspots like India, Mexico, and Thailand. Among other offenses (including egg splitting and failing to adequately screen surrogates), Rupak apparently accepted payments for surrogacy services and kept the payments without performing the agreed services. According to the story, Rupnak is now bankrupt and under investigation by the FBI.

As the article notes, this is only the latest in a series of scandals, some of which I’ve written about before. And such scandals are likely to continue as prospective parents seek to avoid onerous home country regulations or avoid the high cost of surrogacy services in the United States. The article continues:

In fact, hundreds of new surrogacy businesses advertise their services on the Internet because anyone can establish an agency, regardless of background or expertise. Agencies are started and disappear, sometimes reappearing under a new name.

I’m sympathetic to this complaint, and have previously argued that greater regulation could improve many aspects of the surrogacy market. What the article doesn’t acknowledge, however, are the costs that would likely accompany grater oversight of the commercial surrogacy market. As I discuss in prior work on “baby markets” more generally (which include, but are not limited to, commercial surrogacy):

The failure to acknowledge the full breadth of the legal baby market imposes severe costs on the market and its participants. Those costs include the forgone opportunity to develop legal policies designed to improve the functioning of the market, as discussed in Part II.A., and forgone opportunities to further particular public policies unlikely to be advanced solely through the goal of profit-maximization, as discussed in Part II.B.

This is not to suggest that legal oversight is a panacea without costs of its own. Greater government involvement means that costs are likely to rise, some services that people desire may be prohibited, and certain types of customers -- for example, older parents, single parents, and gay and lesbian parents – risk being legislated out of the market. These are the costs that must be weighed against attempts to improve the baby market.

With time, I suppose I’ve become even less optimistic (or, one might argue, more realistic) about the possibility of effective “baby market” regulations that do not eliminate large sectors of the marketplace. For some that would obviously be a welcome outcome. But it would not be welcome by many of those who argue for greater regulation of the surrogacy, ART, and gamete markets, suggesting, perhaps, that such advocates should be careful of what they wish for.

June 05, 2014

I’ve written about incentives and organ donation on a number of occasions here at the Lounge (see, for example, here and here). I spent Monday and Tuesday of this week at a joint workshop of the American Society of Transplant Surgeons and the American Society of Transplantation, discussing the ethics, legality, and feasibility of providing incentives for organ donation. An opinion piece stemming from the workshop will be published in the American Journal of Transplantation, which will outline the types of incentives that would be acceptable, the barriers that would need to be overcome, and define a reasonable path forward.

This was an interesting experience for me. The meeting was small and the breakout groups even smaller. My breakout group on incentives for living organ donation, for example, had only about eight participants. So it was a nice opportunity to meet some transplant surgeons and other transplant professionals from these societies that I had not previously worked with and to learn more about their thinking on these issues.

The Declaration [of Instanbul] outlined an international position on the ethics of paid organ donation intended to send a clear message that exploitive, paid living donation practices that were sometimes even criminal in nature, were not acceptable. The AST signed a letter supporting the Declaration. In the intervening 5 years, the Declaration had a significant impact on reducing and marginalizing these exploitive practices.

However, even at the time, concerns were raised here that opposing those specific practices as documented then in developing countries was not equivalent to banning any future consideration of examining financial incentives for living organ donation in the United States. I now think the time has come for a joint AST/ASTS effort to review the current status of living organ donation in the US. I think this effort should consider the problem from the perspective of disincentives that can be removed and from incentives, including but not limited to financial ones that could be acceptable. The effort should harmonize with the ethical principles embodied in the Declaration of Istanbul, but should reflect the real situation of clinical practice and ethics in the US today. The effort should be inclusive of all the major stakeholders in transplantation, not just the AST and ASTS. It is way beyond me to advocate for any particular outcome at this point, but I will be actively exploring the principle of organizing the effort next.

I could be wrong, but my sense from the meeting is that the current willingness to explore at least some types of incentives is a big departure from the societies’ prior positions on this issue.